He was first elected in 1988 as a Republican to the Texas State Senate from the district including his city of residence, Mount Pleasant in Titus County in northeast Texas. In 1992, he was appointed chairman of the Senate Education Committee by Lieutenant Governor Bob Bullock. From 1997 to 1998, he served as President Pro Tempore of the Texas Senate.[1]

Ratliff announced in 2003 that he would not run for reelection to the State Senate in 2004.[3] Instead he soon resigned the Senate seat and was succeeded in a special election by Republican Kevin Eltife of Tyler. In 2005, Ratliff was awarded the John F. Kennedy Profile in Courage Award for "the example he has set of courage and principle in American public life".[4]

In the election for lieutenant governor, Ratliff defeated rival David Sibley of Waco. In 2001, Ratliff first announced that he would be a candidate for election to a full four-year term to the office of Lieutenant Governor in the 2002 state elections, and he received the endorsement of several prominent Republican legislators.[5] However, he later withdrew from the race, and the position went to David Dewhurst, the Texas land commissioner.[1]

Ratliff is regarded as a moderate;[3] he stated in an interview, "I am a Republican because I agree with the Republicans at least 51 percent of the time."[2] He has taken bipartisan stands on a number of issues. While in the Texas Senate, he supported controversial reforms that transferred funds from richer to poorer school districts for more equitable funding.[4] He also argued in favor of "patients' rights" in medical malpractice cases during a debate on tort reform, and in 2003 criticized other members of the State Senate for failing to raise taxes in order to prevent large budget cuts.[4]

In early 2003, Ratliff was the only dissenting member of his party who joined with Democratic state senators in opposing a redistricting proposal of Texas's then thirty-two seats in the United States House of Representatives that he felt would lead to the under-representation of rural voters.[4] In cooperation with ten Democrats, he signed a letter refusing to bring the matter to the Senate floor, which, by virtue of Texas Senate traditions that require a two-thirds vote of those present and voting to allow a bill to be debated, prevented the proposal from being passed.[3]

Eventually a plan suitable to Republicans was enacted in the third of three special legislative sessions called in 2003 by Governor Perry. Under that plan, by 2011, Republicans held twenty-three U.S. House seats from Texas compared to nine for Democrats.